ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Linked Markets, Unlinked Policies

EPW Research Foundation Linked Markets, Unlinked Policies The last two months' developments in the foreign exchange and money markets have thrown into sharp relief the close linkages developing between the two markets. While the Reserve Bank managed 10 stabilise the spot foreign exchange market by injecting the equivalent of $ I billion in October, the impact of its intervention was felt in the extreme stringency in the money market as reflected in the shooting up of call money rates which, in turn, led to a speculative surge in the forward premia on the dollar.

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